What am I misunderstanding about the Roth IRA? It is untaxed upon distribution is it not?

No, that's the traditional IRA. A Roth IRA is taxed up front and distribution is tax free. If you assume a constant rate of inflation and a constant tax rate, they amount to the same thing mathematically, but the traditional IRA is a closer approximation for a consumption tax than the Roth. Unfortunately, IRAs, whether Roth or traditional, are limited in the size of the contributions and the circumstances under which withdrawals can be made. If you had an income tax that included unlimited traditional IRA contributions with no penalty for early withdrawal, you'd have the equivalent of a consumption tax.

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"I'll see you guys in New York." ISIS Caliph Abu Bakr al-Baghdadi to US military personnel upon his release from US custody at Camp Bucca in Iraq during Obama's first year in office.

I think so, but you can explain it to me in your own words if you want.

OK. It's an idea that I stumbled across a few months ago while checking out various POTUS candidates. Right now we have an income tax system that is inherently unfair. So we have "loopholes" in the tax code as a fix. This gives politicians a way to control what citizens do with the money that they earn, and the system can be changed for political gain or to exert very real pressure on various sections of our society. It's also used by politicians to pander to different economic strata, promoting "class warfare" so we stay too divided as a country to create any kind of mandate. The system is broken. A consumption tax kicks in when goods are exchanged or services are rendered. No goofy tax code with the wealthy paying a ridiculously high percentage of their income as the base amount. So no need for them to play some kind of game to avoid giving up half of what they make. No penalty for people who want to save money, so you end up with people who are more likely to do so. People with a chunk of money in the bank also tend to have more confidence in making purchases. The poor pay less taxes because they just don't have the money to consume as much. If you want to help them out even more, remove the consumption tax for persons under a certain yearly income. On the government side, you get politicians honestly trying to create legislation that promotes a strong economy. They have to. That's how they get paid. Not paying lip service to the business sector because they can always just screw with the tax code. Not painting the wealthy as evil fat cats because it's pretty easy to see when they are "paying their share."

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Oh, thou clear spirit, of thy fire thou madest me, and like a true child of fire, I breathe it back to thee.

OK. It's an idea that I stumbled across a few months ago while checking out various POTUS candidates. Right now we have an income tax system that is inherently unfair. So we have "loopholes" in the tax code as a fix. This gives politicians a way to control what citizens do with the money that they earn, and the system can be changed for political gain or to exert very real pressure on various sections of our society. It's also used by politicians to pander to different economic strata, promoting "class warfare" so we stay too divided as a country to create any kind of mandate. The system is broken. A consumption tax kicks in when goods are exchanged or services are rendered. No goofy tax code with the wealthy paying a ridiculously high percentage of their income as the base amount. So no need for them to play some kind of game to avoid giving up half of what they make. No penalty for people who want to save money, so you end up with people who are more likely to do so. People with a chunk of money in the bank also tend to have more confidence in making purchases. The poor pay less taxes because they just don't have the money to consume as much. If you want to help them out even more, remove the consumption tax for persons under a certain yearly income. On the government side, you get politicians honestly trying to create legislation that promotes a strong economy. They have to. That's how they get paid. Not paying lip service to the business sector because they can always just screw with the tax code. Not painting the wealthy as evil fat cats because it's pretty easy to see when they are "paying their share."

Thanks for the post. I don't believe that the poor would pay less taxes, however. I actually think they would pay a lot more as a percentage of their income than they do now. Poor people generally spend all the money they get on consumer goods. Even middle class people often live paycheck to paycheck and put just a small amount towards savings, and rely on their employer matching their retirement funds and rely on that.

The people who would benefit from a consumption tax are entirely the rich. They already benefit from the "progressive" (now, it's almost regressive) income tax model right now, and it's created huge wealth inequality.

I think the better solution is to close loopholes and special interests for most of the rich and middle class, but rates at their moment are good.

Thanks for the post. I don't believe that the poor would pay less taxes, however. I actually think they would pay a lot more as a percentage of their income than they do now. Poor people generally spend all the money they get on consumer goods. Even middle class people often live paycheck to paycheck and put just a small amount towards savings, and rely on their employer matching their retirement funds and rely on that.

The people who would benefit from a consumption tax are entirely the rich. They already benefit from the "progressive" (now, it's almost regressive) income tax model right now, and it's created huge wealth inequality.

I think the better solution is to close loopholes and special interests for most of the rich and middle class, but rates at their moment are good.

Gonna have to get back to you. Beyonce is on. Good Lord she is hot.

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Oh, thou clear spirit, of thy fire thou madest me, and like a true child of fire, I breathe it back to thee.